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1981 Supreme(Pat) 1
PATNA HIGH COURT
Lalit Mohan Sharma and Brishketu Saran Sinha JJ.
Madan Mills Private Limited
Versus
Collector Of Central Excise
Civil Writ Jurisdiction Case No. 1082 of 1978 ;
Decided On : JANUARY 01, 1981
The expression "excisable goods" in Section 2(d) of the Central Excise and Salt Act, 1944, means goods specified in the First Schedule as being subject to a duty of excise. Even if excisable goods are exempted from excise duty, they continue to be excisable goods if they are still specified in the First Schedule as being subject to a duty of excise.
Headnote:
CENTRAL EXCISE - EXEMPTION - NOTIFICATION - INTERPRETATION - EXCISABLE GOODS - MEANING - MAIDA EXEMPTED FROM DUTY - WHETHER EXCISABLE GOODS - WHETHER VALUE OF MAIDA TO BE INCLUDED IN COMPUTING TOTAL VALUE OF EXCISABLE GOODS FOR PURPOSES OF EXEMPTION - NOTIFICATION NO. 10/71-CE DATED 10-9-1971 AND NOTIFICATION NO. 114/77-CE DATED 18-6-1977 - CENTRAL EXCISE AND SALT ACT, 1944, SEC. 2(D), SEC. 3, SEC. 6, SEC. 35, SEC. 35A, SEC. 36, SEC. 37, SEC. 38, FIRST SCHEDULE, RULE 8(1), RULE 9, RULE 52, RULE 52-A.
Fact of the Case:
The petitioner, Madhav Mills Private Limited, was engaged in the manufacture of Maida, which was exempted from excise duty by a notification issued by the Government of India in 1971. In 1977, another notification was issued exempting goods falling under item 68 of the First Schedule to the Central Excise and Salt Act, 1944, from excise duty, subject to certain conditions. The petitioner claimed that the value of Maida manufactured by it in the preceding financial year could not be included in determining the exemption under the 1977 notification. However, the Assistant Collector of Central Excise asserted that the value of Maida cleared in the previous financial year should be taken into account for determining the exemption.
Finding of the Court:
The court held that the value of Maida manufactured by the petitioner in the preceding financial year could not be included in computing the total value of excisable goods for the purposes of exemption under the 1977 notification. The court interpreted the expression "excisable goods" in Section 2(d) of the Central Excise and Salt Act, 1944, to mean goods specified in the First Schedule as being subject to a duty of excise. The court held that Maida, even though exempted from excise duty, continued to be excisable goods as it was still specified in the First Schedule as being subject to a duty of excise. However, the court held that the expression "all excisable goods cleared" in the proviso to the 1977 notification referred only to such excisable goods on which excise duty had been paid. Therefore, the value of Maida, which was exempted from excise duty, could not be included in computing the total value of excisable goods for the purposes of exemption under the 1977 notification.
Issues: Whether the value of Maida manufactured by the petitioner in the preceding financial year could be included in computing the total value of excisable goods for the purposes of exemption under the 1977 notification.
Ratio Decidendi: The court interpreted the expression "excisable goods" in Section 2(d) of the Central Excise and Salt Act, 1944, to mean goods specified in the First Schedule as being subject to a duty of excise. The court held that Maida, even though exempted from excise duty, continued to be excisable goods as it was still specified in the First Schedule as being subject to a duty of excise. However, the court held that the expression "all excisable goods cleared" in the proviso to the 1977 notification referred only to such excisable goods on which excise duty had been paid. Therefore, the value of Maida, which was exempted from excise duty, could not be included in computing the total value of excisable goods for the purposes of exemption under the 1977 notification.
Final Decision: The court allowed the petition and quashed the impugned order of the Assistant Collector of Central Excise.
Brishketu Saran Sinha, J.
1. Madhav Mills Private Limited (hereinafter referred to as the Mills) are engaged in the manufacture of Maida which is item no 1-F of the First Schedule attached to the Central Excise and Salt Act, 1944, (hereinafter referred to as the Excise Act) and bolts, nuts and screws which are item No. 52 of the said Schedule as also certain articles which are included under item No. 68 of the Schedule. The details of the otter items excluding those under items 1-F and 5S are given in annexure 4 appended to the writ application.
2. By a notification issued by the Government of India dated 10-9-1971, item No. 1-F of the First Schedule, to the Excise Act, has been exempted from payment of duty under Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, (hereinafter referred to as the rules), copy of which is Annexure 1. Thereafter by a notification dated 18-6-1977, under rule 8(1) of the Rules copy of which is annexure 2) the Government of India exempted goods falling under item 68 of the First schedule, if to be utilised for home consumption and if the total value of all excisable goods in The preceding financial year does not exceed Rupees Thirty lacs. The petitioner claims that under the aforesaid notification the total value of Maida manufactured by it in the preceding financial year could not be included in determining the exemption. The Assistant Collector of Central Excise (respondent No. 3), however, asserts that the value of the Maida cleared in the previous financial year shall be taken into account for determining the exemption under the aforesaid notification. Hence this application.
3. The Excise Act, under Sec.2(d) defines excisable goods and Sec.3 is the charging section which provides that there shall be levied and collected in such manner as may be prescribed, duties of excise on all excisable goods other than suit which are produced or manufactured at the rates setforth in the first Schedule and it further empowers different tariff values to be fixed for different classes or descriptions of the same article. Sec. 6 authorises the Central Government, by notification from such date as may be specified in it, to have for the production or manufacture or any process of production or manufacture of any specified goods included in the First Schedule or of saltpetre or of any specified component parts or ingredients of such goods or of specified containers of such goods in accordance with the terms and conditions ranted under this Act. The First Schedule attached to the Act details the items of goods as also the basic and additional rates of duty. It appears that to begin with, the First Schedule contained 11 items which has now increased to 68 items, Sec.37 empowers the Central Government to make rules under Sec.38 such rules have to be laid before each House of Parliament while it is in session for a total period of 30 days which may be comprised in one or two more successive sessions. The Houses have the power to modify or annul the Rules. Under rule 8(1) the Central Government is authorised from time to time by notification in the official gazette to exempt subject to such conditions as may be specified in the notification, any excisable goods from the whole or any part of the duty leviable on such goods. The aforesaid two notifications, annexures 1 and 2, have been issued under this provision.
4. Relevant facts leading to this application are that, as already pointed out earlier, by a notification copy of which is annexure 1, Maida was exempted from the duty of excise leviable thereon. Thereafter, in 1977, came the notification copy of which is annexure 2, granting exemption under certain conditions to articles manufactured under item No. 68. These items manufactured by the mills are M. S. rivetes, casting machinery parts, job work etc. Item 68 under the Schedule provided at the relevant period the rats of duty as 2% ad valorem. On the 7th or 8th of December 1979, the Superintendent o
